The rise and rise of spares suppliers

Spare parts companies for commercial catering equipment are enjoying a purple patch, with customer numbers, stock lines and stock holdings all growing. But what issues do these busy firms face?

According to John Whitehouse, First Choice Group’s director, the industry has to be wary of counterfeit parts entering the market. “These look-alikes risk the efficient operation of equipment and the safety of the kitchen staff. It is common to see components being advertised on eBay and other online retailers that should only be fitted by trained engineers. It is often difficult to tell if these are genuine parts and where they originated.”

Over at GEV, MD Bryn Vivian believes that the complexity of a spares specialist’s entire operation is a daily challenge. “Our role is to enable our customers to extend the life of their machinery. For this, certainty of supply is required in terms of the correct part at a reasonable cost and in a satisfactory timeframe.”

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The Grantham-based firm strives to achieve this in a number of ways, particularly by establishing the best possible working relationship with its suppliers, which are global equipment manufacturers and component producers. “With this established by our sourcing and technical departments, we are able to accurately identify a spare part required, even for ranges of lesser known brands to be found in the UK market. Making sure that parts have the right certification remains of high importance, as is the strict checking, and if necessary quarantining of parts, before despatch from our European distribution centre,” said Vivian.

Price and availability are also main concerns for Caterparts, of Brackley. Technical development manager Matt Titchener also thinks that the knowledge required to supply the correct part is vital. “Over the last 5 years the reliance on making database information correct and available to service engineers via websites has increased the need for accuracy. The UK has historically purchased from every commercial catering manufacturer worldwide, therefore the extraction of reliable information from some manufacturers proves an extremely time consuming exercise in ensuring customers receive the correct spare parts.”

He added: “The mid-summer period also adds to the pressure on spares suppliers, as many major European manufacturers shut down their operations for between 2 and 4 weeks. While they may keep their spares operations open, it is with skeleton staff. The result is that to minimise the potential of being out of stock, additional stock has to be purchased in the weeks leading up to the shutdown.”

Elsewhere, LF Spare Parts’ director, Mark Brooks, considers that increasing competition from internet companies is driving spare parts prices to unsustainable levels, impacting on service and quality. “These new channels (along with some current ones) are making it ever easier for the end users to source spares direct, thus cutting the service companies out of the loop. Economic realities are leading all companies to scrutinise all aspects of spend, including spare parts,” he said. [[page-break]]

CCS’s main concern is trying to shorten the supply chain. “We are continuously reviewing and increasing our stock holdings across all brands, but it’s not possible to carry everything, so then we are in the hands of the manufacturers and sometimes stuck in the middle,” commented MD Jonathan Booth. “Customers’ expectations are also continuously increasing, and the task of trying to keep one step ahead of them takes a lot of work.”

Manufacturers are now much less reluctant to work with spares companies, and indeed are seeing them as an asset to the industry. Caterparts’ Titchener said: “They are able to supply service companies with their spares requirements from many brands. Rather than the service company contacting several OEMs, it can all be dealt with under one roof. This also enables the service companies to build a stronger relationship with their spares supplier.

“Caterparts, as an independent spares supplier, is able to gather spares requirements from many service operations and therefore place larger orders to the OEMs, bringing volume efficiencies to their spares departments. This realisation by the OEMs encourages them to provide an improved information flow which, in turn, enables Caterparts to keep the service companies better informed in terms of price and availability.”

First Choice’s Whitehouse added: “At one time manufacturers saw all independent spare parts suppliers as competitors for their spares business, assuming they would supply inferior parts at lower costs. Today that perception has completely changed in the case of First Choice and most manufacturers see the company as a trusted partner and welcome the professional service that it offers in the supply of genuine OEM parts. Customer support is greatly enhanced if the manufacturer and spares supplier work closely together.”

CCS’s Booth has also seen attitudes change over the firm’s 20 years of trading. “It has taken a while, but I think nearly all the manufacturers now accept that selling spares through distributors like CCS is the best route to market for all parties.”

At GEV, Vivian reports a mixed picture: “There have been interesting cases of leading equipment manufacturers placing their complete faith in independent spares companies, while others stubbornly hold onto their spares sales business. GEV does not actively seek alliances with manufacturers, preferring instead to be approached as a second channel so that parts can be supplied to their customers anywhere in the world within a few days.

“Small and large manufacturers will, no doubt, always continue to review their spares sales policy, making it important for companies like us to adapt quickly and keep our sourcing channels open.”

LF’s Brooks believes there is still a disconnect between some OEMs and the market for their spares. “The market wants choice, availability and therefore competition; this is not always delivered by the OEMs. Spare parts are seen as a cash cow by some OEMs, leading to unrealistic pricing in the market.” [[page-break]]

However, the firm’s demand remains strong and is growing. It holds 40,000 parts available for next day delivery and its range is constantly increasing. For instance, over the last 12 months it has produced new catalogues for refrigeration, granita machines, laundry, vending, barista accessories and oven, and laundry and refrigeration gaskets.

Now that the foodservice sector is booming, the spares market is likewise on the crest of a wave. According to CCS’s Booth: “The economy has improved more money is being released for capital equipment, which will filter through to spares in a few years, as well as for maintenance contracts and repairs that were put off. Spares will always be in demand.”

During its 25 years of experience, Caterparts has seen a correlation between economic buoyancy and sales of spares. “When the national economy is in the doldrums, many end users make the difficult decision to repair, rather than replace, capital equipment. Their operating costs switch from capital spends to maintenance budgets. The upside to spares suppliers is that there will be many more pieces of equipment that will eventually require spare parts,” explained Titchener.

“An additional future advantage for spares operations of a more buoyant economy is that many older pieces of equipment will be disposed of, with the reduction of the problems associated with trying to source spares for older equipment.”

GEV’s business does not tend to be affected by economic cycles. “The option to have a piece of kit repaired at a reasonable cost should be even more compelling as well-priced spare parts become available,” said Vivian. “I see no reason why our company cannot grow steadily, as it has done since its inception 5 years ago through new customer acquisition, thereby taking a level of business away from the two established players in the market. It is also encouraging to see renewed investment by our customers in their spare parts departments, taking back control the important role of spares sourcing, which can only be good for the end customer.”

First Choice’s Waterhouse is pleased with the current market and its outlook: “If well looked after, commercial catering equipment has a long life and the requirement for spare parts is unlikely to diminish. It is always less expensive to look after equipment you already have than to replace it.”

He believes that independent spare parts suppliers are now seen as the preferred route to market by most manufacturers and service providers. “Both can see economic benefits in using companies that can provide a one stop shop for all spares. This trend is likely to continue, with even more manufacturers choosing to work in partnership with specialist spares providers to offer enhanced after sales support to their customers.” [[page-break]]

The firm is adding to its capabilities by offering engineer training courses at its dedicated training centre in Cannock. “We are also updating our websites to provide our customers with faster and more flexible access through smartphones and tablets to our online database of technical information. The challenge is to ensure that customers see the benefits of using OEM parts and are not attracted by the apparent short term savings offered by alternative parts that may not be up to the job,” Waterhouse said.

GEV’s Vivian sees greater dependence of spare parts companies on each other in the coming years order to maximise existing sales channels and the availability of parts. “It could be possible that a spare parts company eventually withdraws due to competitive pressure or merges with another as investment in technology and economies of scale are increasingly demanded.”

LF Spare Parts’ business shows no signs of slowing anyway. At its Gloucestershire headquarters it has expanded its warehousing by 22% to 8,600m2 including the installation of its fifth lean lift storage system, with a sixth planned and on its way.

Looking ahead, Brooks predicted: “Accurate stockholding will continue to be key as service companies continue to hold less and less stock. It is vital that we carry on investing in new technologies to ensure that our response times and service quality are the benchmark for the spares market. We are constantly updating and improving the website and mobile applications that we offer to simplify and streamline our offering.”

He also warned that the upcoming EU referendum could affect business confidence and so believes it is vital that this is completed as soon as possible.

Caterparts’ Titchener surmised: “The future is positive for independent spares suppliers who continue to listen to customers and tailor their offering to those that support the spares sector. This market is best served by those who continue to invest in gathering and presenting relevant information.

“Expectations by customers, in any market sector, are now primarily dictated by speed and reliability of service. Those who wish to grow must equip themselves to be able to deal with these challenges.”

While CCS’s Booth concluded: “Spares is a messy business: it is lots of small transactions being sent to lots of different sites all over the country. Inevitably some of these go wrong. So the challenge is to speed up the supply and reduce the errors.

“Part identification is key, and that’s what we spend a lot of our time and effort doing. But it is moving forward, and will continue to do so. Manufacturers now have much improved drawings and these are increasingly available, and indeed requested by engineers on site via the internet, coupled with various new logistic solutions. I see these as the key areas that CCS can improve our service to our customers and so ultimately the end user.”